Morris study blasted

July 16, 2001 Posted: 1616 GMT

NEW YORK (CNNfn) -- Smokers' early deaths may be a boon to the Czech Republic's finances, a study commissioned last year by Philip Morris Cos. said.

U.S. consulting firm Arthur D. Little International Inc. studied the impact of smoking on Czech public finances at Philip Morris' request in November 2000. The study [Microsoft Word document] found the cost benefits of smokers' early mortality, together with cigarette-tax revenue, outweighed the economic drawbacks of health-care and other smoking-related costs.

Anti-smoking groups seized on the report as evidence that Philip Morris, the world's largest tobacco company, is callous about the health of its customers.

"This report is powerful evidence that the kinder, gentler Philip Morris depicted in the company's U.S. ads is just a wolf in sheep's clothing," said Matthew Myers, president of Campaign for Tobacco Free Kids.

But Philip Morris pointed out the report was nothing more than an economic impact study, focusing only on data from 1999, commissioned in response to criticisms that smoking-related health-care costs were hurting the Czech economy.

"We are not in any way suggesting that the social cost of smoking is of benefit to society," said Robert Kaplan, director of communications at Philip Morris International.

Arthur D. Little, which drafted the study, referred questions about details of it to Philip Morris, saying its study was the property of the tobacco company.

In the study itself, however, the firm agreed with Philip Morris' view, saying, "The results of this study should not be interpreted as defining... whether smoking is good or bad from the standpoint of the individual or the society."

An Arthur D. Little representative said Philip Morris had commissioned similar studies in Canada and the Netherlands, and those studies are mentioned in the report. Kaplan said that no other such studies are ongoing.

The study was commissioned by the tobacco firm's Czech unit in response to claims by the Czech health ministry that smoking's costs outweighed its fiscal benefits. It found the impact of smoking on Czech public finance to be a net gain of 5.815 billion Czech korunas (about $147 million). Most of that gain was derived from tax revenue.

But the government also saved between 943 million and 1.2 billion korunas (about $24 million-to-$30 million) in health-care, pension and public-housing costs due to the early deaths of smokers -- one of the 'positive' benefits of smoking, according to the study.

Anti-smoking activists expressed horror at this finding.

Pressure to change laws

"Even if it were true that smokers dying young would save money for the economy, it's a real scary logic on which to base policy," said Patti Lynn, associate campaign director for corporate watchdog group Infact, which has battled tobacco companies over their marketing practices.

Pressure is building on the Czechs to amend their laws to conform to European Union norms ahead of possible membership in 2004.

Last year the Czech government proposed, but then withdrew, a law that would have tightened existing tobacco advertising rules. The current law allows cigarette advertising on the radio at night, advertising in cinemas, newspapers and magazines, and the prominent display of company logos on billboards and street cars.

Tobacco companies have offered to ban radio and billboard advertising, stop sponsorship of events, and exclude all print advertising where more than one third of the readership is under 18.

Shares of Philip Morris (MO: up $0.78 to $44.68, Research, Estimates), which makes about 80 percent of the cigarettes smoked in the Czech Republic, closed lower Monday.